Nature Risk Has Reached the Boardroom: Why TNFD May Become the TCFD Moment for Biodiversity

When we were undergrad uni-students in the 90s, we frequented the south-western part of Western Australia for all its splendour - magnificent nature, rolling-green farm-scapes, world-class wineries and their restaurants, and most significantly the best beaches on the planet [period]. In fact we all still do, now with our families, here in Perth WA, blessed with this remarkable region just a few hours away. But there is one thing that happened then that just doesn’t happen anymore. Back then we had to stop once, sometimes twice or more at a service station/s just to squidgy of the insects plastered thick on your windscreen. Now - nothing. And we think so little about it. Comprehensive scientific reviews warn that over 40% of insect species are threatened with extinction, making their disappearance one of the most critical ecological crises we face. Biodiversity loss is very, very serious. But viewed as just the incremental decline of nature it doesn’t make headlines, it doesn’t even enter news-cycles.

But things are changing and rapidly.

For years, sustainability was too often treated as a reporting exercise: a matter of compliance, disclosure and reputational hygiene. That era is ending.

This week the Biodiversity Council of Australia released a report, Cracking the code: Using nature data to understand the impact of the ASX200. It is significant because it reframes nature not as an environmental issue, but as a material business, investment and governance issue. Its central message is clear: nature-related risk is already embedded in the Australian economy, but much of it remains poorly measured, poorly priced and poorly governed.

The report finds that nature underpins a large share of economic activity, while biodiversity and ecosystem services continue to decline. It identifies utilities, energy, materials, industrials and consumer staples as the sectors with the highest direct nature impacts across the ASX200. But one of its most important insights is that direct impact is only part of the story.

When value chains and financed impacts are considered, the picture changes dramatically. A retailer, bank or technology company may appear to have a modest direct footprint, yet carry substantial exposure through suppliers, customers, lending books, energy use, water demand and downstream consumption. This is the biodiversity equivalent of the lesson climate disclosure taught us a decade ago: the risks that matter most are often not sitting neatly inside the company’s operational boundary.

That is why the Taskforce on Nature-related Financial Disclosures, or TNFD, matters.

TNFD gives companies and investors a practical structure for identifying, assessing, managing and disclosing nature-related dependencies, impacts, risks and opportunities. Its LEAP approach - Locate, Evaluate, Assess and Prepare - is especially important because nature risk is location-specific. Unlike carbon, biodiversity loss cannot be reduced to one universal unit. The same litre of water, hectare of land or tonne of material can have very different consequences depending on where it is used, extracted or disturbed.

This is also why TNFD should not be seen as “another ESG framework”. Its deeper purpose is to move nature from the sustainability report into strategy, capital allocation and enterprise risk management.

We have seen this movie before.

The Task Force on Climate-related Financial Disclosures, or TCFD, began as a voluntary market-led framework after the Financial Stability Board recognised that climate change was no longer simply an environmental concern. It was a financial stability concern. What made TCFD extraordinarily effective was not merely that it asked companies to disclose climate data. Its genius was structural. It linked four pillars: Governance, Strategy, Risk Management, and Metrics and Targets.

That linkage changed the conversation.

Climate moved from the sustainability team to the boardroom. Directors had to explain oversight. Executives had to explain strategic resilience. Risk teams had to integrate climate into enterprise risk systems. Finance teams had to consider capital expenditure, asset lives, impairment, insurance, transition risk and scenario analysis. Investors gained a language for asking better questions.

In less than a decade, TCFD went from voluntary guidance to the foundation of global climate reporting architecture, influencing the ISSB standards and mandatory disclosure regimes around the world. Its rise was extraordinary because it solved a practical problem: it gave markets a common governance and strategy language for a systemic risk that had previously been treated as external.

TNFD is now attempting a similar shift for nature.

But nature is more complex than climate. Climate disclosure has the advantage of a dominant metric: greenhouse gas emissions. Nature has no single equivalent. It includes land use, water consumption, pollution, habitat loss, invasive species, ecosystem degradation, species decline and supply chain impacts. It is more local, more multi-dimensional and often harder to quantify.

That complexity is real. But it is not an excuse for inaction.

The Biodiversity Council report makes this point forcefully. Data gaps remain, particularly around supply chains and financed impacts, but the direction of risk is already clear. Companies do not need perfect data before they begin assessing their exposure, engaging suppliers, avoiding high-impact locations, reducing water and land-use pressures, and aligning capital decisions with nature-positive outcomes.

This is where the work of Michael Porter and George Serafeim becomes so relevant.

Porter’s contribution was to insist that sustainability only becomes durable when it is connected to competitive advantage. His work on shared value challenged companies to stop treating social and environmental issues as peripheral costs and start seeing them as part of productivity, innovation, market positioning and long-term competitiveness.

Serafeim’s work has taken this further into the machinery of corporate performance, governance, capital markets and implementation. His core insight is that sustainability creates value only when it is material, strategic and operationally embedded. Generic ESG activity is weak. Strategic sustainability is different. It focuses on the issues that matter most to the business model, its stakeholders and its long-term economics.

Together, these ideas help explain why the governance-strategy linkage is so powerful.

Governance without strategy becomes oversight theatre. Strategy without governance becomes aspiration. Metrics without governance become dashboards. Targets without strategy become slogans. Effective sustainability implementation requires the connection between board accountability, executive incentives, capital allocation, operational decisions, risk management and disclosure.

This is the real significance of TCFD — and the opportunity for TNFD.

The best companies will not treat TNFD as a reporting template. They will use it as a strategic management tool. They will ask:

Where do we touch nature?

Where do we depend on nature?

Where are the highest-risk locations in our operations and value chain?

Which impacts are avoidable?

Which suppliers, assets, products or financing relationships create the greatest exposure?

What would regulation, ecosystem decline or community opposition do to our cost base, licence to operate and growth strategy?

How should this change capital allocation?

For investors, the implications are equally important. Nature risk is not only about excluding high-impact sectors. Some high-impact activities are economically essential. The more sophisticated question is whether companies understand their impacts, are reducing avoidable harm, are resilient to nature-related disruption, and are contributing to system-wide solutions.

That means investors need to use three levers together: capital allocation, stewardship and policy engagement. They need to distinguish leaders from laggards within sectors. They need to engage not only the companies with the largest direct impacts, but also the companies with the greatest leverage through supply chains, financing and procurement.

The Biodiversity Council report is therefore more than an environmental assessment of the ASX200. It is an early signal of a broader market transition.

Climate risk taught boards that externalities eventually find their way into cash flows, valuations, regulation and litigation. Nature risk is now following the same path. The companies that understand this early will build better data, better governance, better supplier relationships, better asset resilience and better strategic options.

The companies that wait for perfect measurement may discover that the market, regulators and ecosystems have moved faster than they have.

The next phase of sustainability will not be won by companies that publish the most polished reports. It will be won by companies that understand where sustainability intersects with strategy — and then govern, invest and execute accordingly.

That is the real lesson of TCFD.

And it may become the defining test of TNFD.

To get the most out of the sustainability changes now reshaping business, governance and investment in the low carbon economy taking shape around us, sign up to Keeping It Real.

References

Biodiversity Council. (2026). Cracking the code: Using nature data to understand the impact of the ASX200. Biodiversity Council, Melbourne, Australia.

Financial Stability Board. (2023). FSB publishes annual progress report on climate-related disclosures. This confirms the TCFD’s final status report and disbanding after completion of its remit.

IFRS Foundation. (2023). ISSB and TCFD. This explains how the ISSB standards became the successor architecture to the TCFD framework.

Task Force on Climate-related Financial Disclosures. (n.d.). Task Force on Climate-related Financial Disclosures. The official TCFD site notes that the FSB created the TCFD in 2015 and that it was disbanded after the 2023 status report.

Taskforce on Nature-related Financial Disclosures. (2023). Recommendations of the Taskforce on Nature-related Financial Disclosures. TNFD, final recommendations released 18 September 2023.

United Nations System of Environmental Economic Accounting. (2023). TNFD releases the Recommendations for nature-related management and disclosure. This provides a concise overview of TNFD’s final recommendations and supporting guidance, including LEAP.

UNEP Finance Initiative. (2023). The Taskforce on Nature-related Financial Disclosures launches final recommendations. This is useful for the link between TNFD and the TCFD-style disclosure architecture.

Porter, M. E., & Kramer, M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1–2), 62–77.

Porter, M. E., & Kramer, M. R. (2011). The big idea: Creating shared value. Harvard Business Review.

Serafeim, G. (2020). Social-impact efforts that create real value. Harvard Business Review.

Harvard Business School. (2020). Social-Impact Efforts That Create Real Value. Faculty publication page for George Serafeim’s article on integrating ESG